Roughly a week after Congress approved a measure to slash federal spending and suspend the debt ceiling, House Republicans on Friday unveiled a sprawling set of proposals that aim to cut taxes for businesses and some families.
While the exact fiscal impact of the legislation is not yet clear, the new package threatens to add to the nation’s growing debt at a time when Republicans have clamored in Washington for austerity — and recently drove the government to the brink of default in pursuit of it.
Republicans laid out their agenda in a trio of bills introduced by Republican Representative Jason T. Smith of Missouri, the leader of the tax-focused House Ways and Means Committee, whose panel is set to consider the measures as soon as next week. Democrats already have panned the GOP blueprint, foreshadowing its likely death in the Senate even if it advances out of the narrowly divided House.
The first measure temporarily would revive a set of tax breaks chiefly targeting companies’ research spending, interest expenses, and equipment purchases. All three policies help lower large corporations’ tax bills, but they lapsed last year as part of a larger, planned wind-down of former president Trump’s 2017 tax overhaul, a process that accelerates in 2025.
As part of that bill, Republicans also proposed to rethink key climate programs that Democrats secured last year in the Inflation Reduction Act in a bid to fight climate change. The proposal would introduce new limits on tax credits meant to help Americans purchase electric vehicles while prohibiting purchasers from applying federal aid toward used vehicles. Republicans also would revoke tax credits to boost clean energy production and clean electricity investment, and they would terminate the new tax imposed on toxic chemical dumping sites.
In a second measure, Republicans would allow American families that earn less than $400,000 annually to claim a larger standard deduction for the next two years. Married couples who do not itemize would see their deductions rise by $4,000, while single filers would benefit from an extra $2,000, further augmenting the increases that taxpayers initially received under the 2017 overhaul.
A third bill that targets small businesses includes a repeal of a new requirement that taxpayers report to the government any transactions above $600 occurring on services like Venmo. While the Internal Revenue Service last year delayed implementing the rule, GOP lawmakers supported restoring it to its original $20,000 threshold.
“These policies will provide relief for working families, strengthen small businesses, grow jobs, and protect American innovation and competitiveness,” Smith said in a statement.
By Friday afternoon, Republican leaders had not yet officially obtained the customary review of the legislation from nonpartisan fiscal experts on Capitol Hill, including the Joint Committee on Taxation. Another watchdog, the Congressional Budget Office, previously projected that such tax cuts could contribute greatly to the country’s skyrocketing debt, which is already expected to surge from about $31 trillion in 2023 to around $50 trillion after the next 10 years.
If lawmakers had opted to preserve the entirety of Trump’s tax law, for example, it would have added $3.5 trillion to the deficit by 2034, the CBO found earlier this month. Many Republicans see the debate this year as a prelude to a more significant push — potentially coinciding with the 2024 presidential election — to extend broad swaths of their 2017 overhaul.
Even a more narrow GOP proposal that focuses on extending some of those now-expired tax breaks — including a change to the way companies deduct research expenses — still could add $325 billion to the debt, the analysis found. A concern about the price tag scuttled a last-minute attempt to cobble together a tax deal at the end of 2023 when Democrats seemed open to preserving the Trump-era policy in exchange for increases in the child tax credit.
Anticipating criticism, Republicans in recent weeks have pointed out that such proposals create jobs and economic activity, lessening the deficit impact. But the early math still offered a stark contrast with the party’s pronouncements about the nation’s worsening fiscal health — a concern that prompted GOP lawmakers to hold up the country’s ability to borrow more money until they could achieve their fiscal agenda.
Biden, for his part, proposed during weeks of private talks with Republican House Speaker Kevin McCarthy of California that the country could reduce the nation’s debt by raising more money — imposing long-sought tax hikes targeting wealthy American families and corporations. But Republicans rejected those ideas outright, resulting in a deal that achieves only limited improvement in the nation’s finances through some cuts to federal agencies’ budgets. That included clawing back billions of dollars that were supposed to help the IRS pursue unpaid federal taxes.